The Theory of Rational Expectations Calls for Monetary Policy Rules

question 39

Multiple Choice

The theory of rational expectations calls for monetary policy rules because

• A) of past policy errors.
• B) policy tends to be countercyclical.
• C) of the inability to time policy decisions.
• D) of the reaction of the public to the expected effects of policy.

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Definitions:

Ion

An atom with either an excess or a deficiency of electrons in the valence; a negatively or positively charged particle.

Surplus of Electrons

A condition where there are more electrons than protons in a system, leading to a negative charge.

Ohmmeter

An instrument for measuring electrical resistance in ohms, used in diagnosing and troubleshooting electrical problems.

Electrical Circuit

A pathway formed by conducting materials through which electric current flows.